BlackBerry (BBRY) Q2 Release Contains No Bombshells, Thinks Analyst

September 27, 2013 12:48 PM EDT Send to a Friend
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Price: $10.24 +1.89%

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On Friday morning, BlackBerry (Nasdaq: BBRY) reported Q2 results. As expected, the company's performance was unimpressive. However, in the view of Wells Fargo analyst Mynard Um, the report did not reveal anything that could jeopardize a potential takeout by Fairfax.

"The key question is whether there are issues that could cause a snag in Fairfax’s due diligence, in our view. While the company’s MD&A filing may provide more color, based on the company's earnings, we do not believe there is," said Um.

"Although BBRY’s unencumbered by debt, we do note a ~$500MM reduction in cash and equivalents that is concerning. Given that BBRY plans to restructure and wants to assume ~$2B in leverage, we are of the belief that the company should sell certain of the assets it has (like parts of its $1.3B in buildings/leasehold improvements/other) to bolster its cash position. We believe that Fairfax being a sophisticated investor is likely cognizant of this issue and will address it appropriately to stem further erosion in the company’s liquidity," added the analyst.

Wells Fargo has a Market Perform rating on BlackBerry with a price target of $8 to $9.

For an analyst ratings summary and ratings history on BlackBerry (NASDAQ: BBRY) click here. For more ratings news on BlackBerry click here.

Shares of BlackBerry closed at $7.95 yesterday, with a 52 week range of $7.75 to $17.22.


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